(Source: Business Wire)
Genzyme
Corp. (NASDAQ: GENZ) today reported that third-quarter revenue was
$1.06 billion, compared with $1.16 billion in the same period a year
ago. Results reflect the impact of the temporary interruption in
production of Cerezyme® (imiglucerase for injection) and
Fabrazyme® (agalsidase beta) associated with the remediation
of the company's Allston manufacturing facility.
GAAP net income was $16.0 million, or $0.06 per diluted share, compared
with $119.6 million, or $0.42 per diluted share, in the third quarter of
2008. Non-GAAP net income was $83.9 million, or $0.31 per diluted share,
compared with $151.4 million, or $0.53 per diluted share, in the same
period last year. Non-GAAP net income excludes purchase accounting and
inventory step-up associated with the acquisition of Bayer oncology
assets, and stock compensation.
GAAP and non-GAAP net income in this year's third quarter reflect the
$23.7 million pre-tax cost of the temporary Allston shutdown and related
remediation costs. Net income also includes the $7.0 million pre-tax
impact of a payment to acquire technology from Targeted Genetics. These
expenses, along with lost Cerezyme/Fabrazyme revenue and a shift in
product mix, reduced the gross margin to approximately 67 percent of
revenue during the third quarter.
The company expects its 2009 non-GAAP EPS to be approximately $2.26,
compared with previous guidance of $2.35 -- $2.90. This reflects the
decision to write off Cerezyme work-in-process material, the cost of
remediating the Allston plant, and management of customer-level
inventories related to the Bayer transaction.
Genzyme generated approximately $363 million in cash from operations
during the third quarter. The company continues to reinvest cash to
expand its manufacturing infrastructure and repurchase shares to offset
dilution. During the third quarter, Genzyme repurchased 5.5 million
shares for $307 million. To date this year, the company has repurchased
7.5 million shares for $414 million, and is on track to reacquire a
total of 20 million shares by May 2010, in-line with the goals of its
existing three-year stock buyback program. Currently Genzyme has 274
million diluted shares outstanding.
"During the next 12 months, we will invest in our existing business and
pipeline, while making changes to become stronger and build for our
future," said Henri A. Termeer, Genzyme's chairman and chief executive
officer. "In particular, we will concentrate on recapturing momentum in
our genetic disease business, where we will commit the resources to
provide the highest level of service and support to patients and
physicians."
Recovery of the Allston Plant
Genzyme has successfully re-started all six bioreactors at Allston for
the production of Cerezyme and Fabrazyme. The company this month began
filling vials of newly produced Cerezyme and anticipates that the
product will be available for shipment starting at the end of November.
Genzyme has completed the first production cycles for Fabrazyme, is
preparing to begin the next, and anticipates that the first shipments of
new Fabrazyme will take place in late-December. The company expects that
it will be able to fully meet anticipated demand for these therapies in
the first quarter of 2010.
The current limited inventory of both products is being distributed
through conservation programs to help ensure that the most vulnerable
patients continue to receive treatment. Clinical guidelines developed by
expert physicians, patient group leaders and regulators are in place
globally to help support doctors and patients in their decisions about
product usage during this period.
As part of its efforts to strengthen its manufacturing operations,
Genzyme has appointed a new site leader at the Allston plant, is
recruiting additional executives to oversee manufacturing and quality
control, and has hired third-party quality assurance and compliance
experts to review Genzyme's operations.
In addition, construction continues on a new manufacturing facility for
Cerezyme and Fabrazyme in Framingham, Mass. The plant is expected to be
mechanically complete with all cell culture and bioreactor suites
installed by the end of this year, and the first engineering runs for
Fabrazyme are planned for the first half of 2010. The first FDA approval
for commercial production at the plant is anticipated in 2011 for
Fabrazyme, with Cerezyme to follow. This plant, which will include four
2000 L bioreactors, will provide substantial additional capacity to
support the growth of the two products. Genzyme has already hired more
than 100 people associated with the start-up of this facility.
Lumizyme Progress
Genzyme is also expanding manufacturing capacity for Myozyme®
(alglucosidase alfa) / Lumizyme (alglucosidase alfa). The company has
transitioned all production to its Geel, Belgium facility, where it is
adding a third 4000 L bioreactor. Upon EMEA and FDA approvals of this
bioreactor, the company will have the capacity to provide treatment for
approximately 3,000 patients. Genzyme is actively seeking to acquire
additional manufacturing capacity for Myozyme to support the longer-term
growth of this product.
With the completion of the current projects in Belgium and Framingham,
Genzyme will have more than quadrupled its biologics manufacturing
capacity since 2004. The company is investing more than $1 billion to
expand the Allston and Belgium facilities and to construct the new
Framingham plant.
Genzyme has received FDA clearance to transition U.S. patients in the
Myozyme Temporary Access Program from the product produced at the 2000 L
scale to that produced at the 4000 L scale. The PDUFA date for Lumizyme
(the 2000 L product) is November 14. Upon approval, Genzyme plans to
submit a supplemental BLA for the 4000 L process. A standard review
period is four months, which would mean an FDA action date by the end of
March 2010. An FDA approval would enable widespread access to the
treatment for U.S. patients.
Third-Quarter Results and Pipeline Updates
Genetic Disease
Within this segment, Myozyme revenue grew to $86.0 million, compared
with $76.7 million in the third quarter of 2008. European sales are
continuing to re-accelerate this year following the first-quarter E.U.
approval of production at the 4000 L scale, which expanded supply.
Second-quarter sales were $79.3 million.
Cerezyme revenue was $93.6 million, compared with $309.3 million in the
same period last year, and Fabrazyme sales were $115.2 million compared
with $125.6 million last year. Revenue for both products reflects the
impact of the temporary interruption in production due to the Allston
remediation. Third-quarter sales of Aldurazyme® (laronidase)
were $40.3 million, compared with $38.2 million in the third quarter of
2008.
Genzyme has begun enrollment in the first of two global, multi-center,
phase 3 trials of Genz-112638, a potential new oral therapy for Gaucher
disease type 1. Genzyme is accelerating this development program in an
effort to bring this potential therapy to patients as quickly as
possible. Currently over 35 centers in more than 20 countries are
participating in these trials, and the company expects that the number
of recruiting centers will continue to increase, as more sites receive
regulatory approval.
Genzyme is collaborating with PTC Therapeutics Inc. on ataluren, a novel
oral therapy for the treatment of genetic disorders due to nonsense
mutations. A pivotal phase 2b trial of ataluren in Duchenne muscular
dystrophy is fully enrolled and results are anticipated in the first
half of next year. A phase 3 trial in cystic fibrosis recently began
enrolling patients.
Biosurgery
Within the Biosurgery segment, sales of Synvisc® (hylan G-F
20) increased 30 percent to $87.5 million, from $67.5 million in last
year's third quarter. This strong growth is being driven by the
successful U.S. launch of Synvisc-One® (hylan G-F 20), which
is exceeding expectations. The product was launched in March and now
represents more than 50 percent of all U.S. Synvisc business.
Synvisc-One is the only single-injection viscosupplement approved for
the treatment of osteoarthritis knee pain in the United States, and its
launch has significantly improved Genzyme's market share and competitive
position. By reducing the burden and cost of multiple injections,
Synvisc-One is expanding the market for viscosupplementation products
and extending the benefits of this therapeutic approach to a broader set
of patients.
Sales of Sepra® products grew 15 percent to $37.8 million,
from $33 million in the third quarter of 2008, with growth driven by
increasing use of the Seprafilm® adhesion barrier in
C-section and other gynecologic procedures.
Cardiometabolic and Renal
Within this segment, sales of Genzyme's sevelamer therapies, Renvela®
(sevelamer carbonate) and Renagel® (sevelamer hydrochloride),
were $181.7 million in the third quarter, compared with $171.0 million
in the same period last year.
Genzyme has begun the launch of Renvela in Europe, following the
product's approval there in June. The approval includes patients not on
dialysis with serum phosphorus levels â'¥ 1.78 mmol/L (5.5 mg/dL), and
covers both the tablet and the powder formulations.
Genzyme launched Renvela tablets for dialysis patients in the U.S. last
year, received FDA approval of the powder formulation for that
indication during the third quarter, and plans to launch the new
formulation next month.
Genzyme has completed enrollment in a pivotal trial of an advanced
phosphate binder (APB) for patients with renal disease, and results are
expected in the first quarter of next year. The APB is designed to more
effectively bind phosphate for a substantial improvement in potency
while maintaining all the benefits of sevelamer. The company anticipates
that the APB would be approved by the time the core patent estate for
sevelamer expires in 2014.
Sales of Thyrogen® (thyrotropin alfa for injection) were
$41.7 million compared with $38.2 million during the third quarter of
2008.
The first phase 3 study of mipomersen, in patients with homozygous
familial hypercholesterolemia (FH), met its primary endpoint and full
results will be presented at the American Heart Association meeting next
month. Enrollment is complete in the second phase 3 study of mipomersen,
in patients with heterozygous FH, and results are anticipated during the
first half of next year. Genzyme is collaborating with Isis
Pharmaceuticals Inc. on the development of this treatment.
Hematologic Oncology
Revenue from the company's Hematologic Oncology segment more than
doubled to $88.0 million, from $34.1 million in the same period last
year. This increase was driven by new revenue from Leukine®
(sargramostim), Campath® (alemtuzumab) and Fludara®
(fludarabine phosphate), following the closing of the
transaction with Bayer at the end of May. Revenue, however, was lower
than expected as the company worked this quarter to manage inventories,
integrate these products into its business across several new
geographies, and hire and train new personnel to support the expanded
business. Genzyme expects these activities to continue throughout the
fourth quarter.
Third-quarter growth in this segment was also driven by Clolar®
(clofarabine injection) and Mozobil® (plerixafor injection).
Mozobil was launched in Europe following approval there in August.
Genzyme is also making excellent progress in the ongoing U.S. launch of
the product, and sales for the first three quarters of 2009 are tracking
to the company's guidance of $40 -- $50 million for the year.
Genzyme has requested a meeting with the FDA to discuss a path forward
for the potential use of Clolar in adult patients with acute myeloid
leukemia, following the receipt of a complete response letter regarding
the company's sNDA this month. The agency has recommended that a
randomized, controlled clinical study be conducted for label expansion
of Clolar in this indication. Genzyme is conducting a randomized,
placebo-controlled phase 3 trial comparing Clolar in combination with
cytarabine to cytarabine alone in relapsed and refractory adult AML
patients. The trial continues to exceed patient accrual expectations,
and results are expected in 2011.
At the December American Society of Hematology meeting there will be 12
oral presentations on Genzyme's hematologic oncology products, including
new data on expanded indications in development for Mozobil, Clolar and
Campath with the potential to drive future growth. Data will be
presented from a phase 3 trial of Campath's use in combination with
Fludara in relapsed or refractory chronic lymphocytic leukemia patients,
which recently met its primary endpoint. There will be presentations on
Clolar's use in AML, non-Hodgkins lymphoma, myelodysplastic syndromes
and as a conditioning regimen for bone marrow transplantation. Mozobil
pharmacoeconomic data, as well as data on the product's development for
use in chemosensitization, will also be presented.
Genzyme's alemtuzumab for multiple sclerosis showed a durable treatment
benefit in a review of four-year phase 2 trial data, which was presented
at the ECTRIMS annual meeting last month. Enrollment has been completed
ahead of schedule in both phase 3 studies of the product, with results
expected in 2011 and U.S. approval anticipated in 2012.
Other Revenue -- Transplant, Genetics and Diagnostics
Other revenue, which includes the company's Transplant, Genetics and
Diagnostics businesses, was $208.4 million compared to $198.5 million
during the third quarter of 2008.
Genetics revenue increased 12 percent to $91.9 million from $82.1
million in the same period last year, driven by volume increases from
new and existing clients in the reproductive and oncology businesses.
Within the Transplant business, sales of Thymoglobulin®
(anti-thymocyte globulin, rabbit) were $55.6 million, a 16 percent
increase over $47.8 million in last year's third quarter, driven by
continued geographic expansion. Construction is nearly complete on a new
Thymoglobulin manufacturing facility in Lyon, France, which is intended
to meet the anticipated long-term demand for the product, both for its
current use and potential new indications. Pending regulatory authority
approval, commercial production is anticipated to begin at the site next
year. Genzyme continues to explore expanded uses for Thymoglobulin,
including in Type 1 diabetes, where it is conducting a phase 2 trial in
conjunction with the Immune Tolerance Network.
Operating Expenses
Genzyme's non-GAAP operating expenses (which include non-GAAP SG&A, R&D,
and amortization) in the third quarter were $619.2 million, compared
with $652.8 million in the third quarter of 2008. GAAP operating
expenses were $657.9 million compared with $691.7 million in the same
period last year. GAAP and non-GAAP operating expenses for the third
quarter of 2008 included a $100 million licensing fee to PTC for
ataluren.
Developing New Markets
During the third quarter, Genzyme broke ground on a new R&D facility in
Beijing. The initiative is a key element in Genzyme's ongoing global
expansion and commitment to establishing a long-term presence in this
important market. Genzyme currently has offices in Beijing and Shanghai,
and markets Synvisc, Thymoglobulin and Fludara in China. In addition,
Genzyme is building its presence in India, and this year launched
Renvela and Synvisc-One there. Genzyme also markets Thymoglobulin and
Thyrogen in the country, has a commercial office in New Delhi, and is
engaged in clinical development work.
About Genzyme
One of the world's leading biotechnology companies, Genzyme is dedicated
to making a major positive impact on the lives of people with serious
diseases. Since 1981, the company has grown from a small start-up to a
diversified enterprise with more than 11,000 employees in locations
spanning the globe and 2008 revenues of $4.6 billion.
With many established products and services helping patients in
approximately 100 countries, Genzyme is a leader in the effort to
develop and apply the most advanced technologies in the life sciences.
The company's products and services are focused on rare inherited
disorders, kidney disease, orthopaedics, cancer, transplant and immune
disease, and diagnostic testing. Genzyme's commitment to innovation
continues today with a substantial development program focused on these
fields, as well as cardiovascular disease, neurodegenerative diseases,
and other areas of unmet medical need.
Conference Call Information
Genzyme will host a conference call today at 11:00 a.m. Eastern. To
participate in the call, please dial 773-799-3828 and refer to pass code
"Genzyme." A replay of this call will be available by dialing
203-369-0172. This call will also be Webcast live on the investor events
section of www.genzyme.com.
Replays of the call and the Webcast will be available until midnight on
October 28, 2009.
Upcoming Events
Genzyme will host a conference call on February 17, 2010 at 11:00 a.m.
Eastern to discuss financial results for the fourth quarter of 2009, and
2010 guidance. To participate in the call, please dial 773-799-3828 and
refer to pass code "Genzyme." A replay of this call will be available by
dialing 203-369-0261. This call will also be Webcast live on the
investor events section of www.genzyme.com.
Replays of the call and the Webcast will be available until midnight on
February 24, 2010.
This press release contains forward-looking statements regarding
Genzyme's financial outlook and business plans and strategies, including
without limitation: its Q4 and YE 2009 non-GAAP EPS guidance; its
expectations regarding the timing of shipments of newly-produced
Cerezyme and Fabrazyme and when the company anticipates being able to
meet full demand for these products; its regulatory plans, timetables
and expectations for approval of alglucosidase alfa produced using the
2000L scale process by the FDA, the 4000L scale process by the FDA, and
the additional 4000L bioreactor by the EMEA and the FDA; its plans to
increase manufacturing capacity for Cerezyme, Fabrazyme, Myozyme and
Thymoglobulin, including expectations regarding the timing of receipt of
regulatory approvals of the new facilities and the effect the additional
capacity in Framingham, Geel and Lyon will have on Genzyme's ability to
meet anticipated demand for these products; its expectations regarding
the timing of receipt of clinical data and U.S. approval for alemtuzumab
for MS; its plans and estimated timetables for new and next-generation
product clinical trials, filings and regulatory approvals, including for
Genz-112638, APB, mipomersen, and ataluren; its plans to drive future
growth of Mozobil, Clolar and Campath by developing expanded indications
for these products; its strategy for moving forward on Clolar in AML and
the expected timing of receipt of clinical trial results; its sales
expectations for oncology products; and its plans to launch the powder
formulation of Renvela in the U.S. and the timing thereof. These
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those forecasted. These risks
and uncertainties include, among others that: Genzyme encounters
additional manufacturing problems due to mechanical failures, viral or
bacterial contamination, or any other reason; Genzyme encounters further
supply problems due to low product yields, or a determination by a
regulatory authority that product produced at its Allston facility or
any other facility cannot be released; Genzyme is unable to obtain
and/or maintain regulatory approvals for its products, manufacturing
processes and manufacturing facilities, including securing FDA approval
for alglucosidase alfa produced at the 2000L scale in Allston and the
4000L scale in Geel on expected timeframes or at all; Genzyme is unable
to file for U.S. approval for the alglucosidase alfa produced using the
4000L process within the expected timeframe due to a failure to obtain
FDA approval of the product manufactured using the 2000L process,
failure to secure agreement as to strategy, including its decision to
file a sBLA to the 4000L BLA, or any other reason; Genzyme and its
collaboration partners are unable to successfully complete clinical
development of new products, including Genz-112638, mipomersen and
ataluren, at all or on expected timeframes; Genzyme is unable to expand
the use of current and next-generation products in existing and new
indications, including Synvisc-ONE, Mozobil, alemtuzumab-MS, APB, Clolar
and Campath; Genzyme is unable to manufacture its products and product
candidates in a timely and cost effective manner and in sufficient
quantities to meet demand; Genzyme's integration of products and
development programs acquired from Bayer is more costly or
time-consuming than forecasted; Genzyme is unable to maintain and
enforce its intellectual property rights; Genzyme is unsuccessful in
identifying and marketing to new patients; the availability and extent
of reimbursement from third party payers is restrained; and the risks
and uncertainties described in Genzyme's SEC reports filed under the
Securities Exchange Act of 1934, including the factors discussed under
the caption "Risk Factors" in Genzyme's Quarterly Report on Form 10-Q
for the period ended June 30, 2009. Genzyme cautions investors not to
place substantial reliance on the forward-looking statements contained
in this press release. These statements speak only as of today's date
and Genzyme undertakes no obligation to update or revise the statements.
Genzyme®, Cerezyme®, Fabrazyme®, Myozyme®,
Synvisc®, Synvisc-One®, Sepra®,
Seprafilm®, Renvela®, Renagel®, Thyrogen®,
Mozobil®, Clolar®, Campath® and
Thymoglobulin® are registered trademarks and Lumizyme is a
trademark of Genzyme Corporation or its subsidiaries. Fludara® and
Leukine® are registered trademarks licensed to Genzyme
Corporation. Aldurazyme® is a registered trademark of
BioMarin/Genzyme LLC. All rights reserved.
Genzyme's press releases and other company information are available at www.genzyme.com
and by calling Genzyme's investor information line at 1-800-905-4369
within the United States or 1-678-999-4572 outside the United States.
GENZYME CORPORATION (GENZ)
Consolidated Statements of Operations Three Months Ended Nine Months Ended
(Unaudited, amounts in thousands, except per share amounts) September 30, September 30,
2009 2008 2009 2008
Total revenues $ 1,057,514 $ 1,160,284 $ 3,434,895 $ 3,431,479
Operating costs and expenses:
Cost of products and services sold 359,407 285,208 1,005,742 857,851
Selling, general and administrative 367,347 331,170 1,039,436 996,861
Research and development 219,275 305,242 636,722 949,900
Amortization of intangibles 71,280 55,295 192,823 166,558
Contingent consideration expense 28,197 - 37,287 -
Total operating costs and expenses 1,045,506 976,915 2,912,010 2,971,170
Operating income 12,008 183,369 522,885 460,309
Other income (expenses):
Gain (loss) on investments in equity securities, net (651 ) (14,129 ) (1,332 ) (4,201 )
Gain on acquisition of business - - 24,159 -
Other 616 (133 ) (2,419 ) 940
Investment income 4,544 11,793 14,038 40,015
Interest expense - (792 ) - (3,596 )
Total other income (expenses) 4,509 (3,261 ) 34,446 33,158
Income before income taxes 16,517 180,108 557,331 493,467
Provision for income taxes (522 ) (60,512 ) (158,276 ) (159,036 )
Net income $ 15,995 $ 119,596 $ 399,055 $ 334,431
Net income per share:
Basic $ 0.06 $ 0.44 $ 1.48 $ 1.25
Diluted (1) $ 0.06 $ 0.42 $ 1.45 $ 1.19
Weighted average shares outstanding:
Basic 268,957 269,176 269,923 267,767
Diluted (1) 273,741 288,179 275,375 286,003
All amounts herein are presented in accordance with GAAP and are provided for quantitative analysis only and should be read in conjunction with the text of the Earnings Release. In addition, we believe that certain Non-GAAP financial measures, when considered together with the GAAP figures, can enhance the overall understanding of the company's past financial performance and its prospects for the future. Please refer to our GAAP to Non-GAAP Reconciliations attached to the Earnings Releases for the above respective periods, which are filed as 8-K's with the Securities and Exchange Commission at www.sec.gov. The Non-GAAP financial measures are provided with the intent of providing investors with a more complete understanding of the trends underlying our operating results and financial position and are among the primary indicators management uses for planning and forecasting purposes and measuring the company's performance. A service of YellowBrix, Inc.
